Biocore Medical v. Khosrowshahi

F I L E D
United States Court of Appeals
Tenth Circuit
NOV 4 2003
UNITED STATES COURT OF APPEALS
TENTH CIRCUIT PATRICK FISHER
Clerk
BIOCORE, INC. and BIOCORE
MEDICAL TECHNOLOGIES, INC.,
Plaintiffs - Appellants - Cross-
Nos. 00-3170 and 00-3180
Appellees,
(D.C. No. 98-CV-2031-KHV)
v.
(District of Kansas)
HAMID KHOSROWSHAHI,
Defendant - Appellee - Cross-
Appellant.
ORDER AND JUDGMENT*
Before HENRY, HOLLOWAY and LUCERO, Circuit Judges.
I
These cases are cross-appeals from a decision by the District Court for the District
of Kansas denying damages and post-judgment relief to all parties in this diversity suit.
The cases were brought by Biocore Medical Technologies, Inc. and Biocore, Inc.
*
This order and judgment is not binding precedent, except under the doctrines of
law of the case, res judicata, and collateral estoppel. This court generally disfavors the
citation of orders and judgments; nevertheless, an order and judgment may be cited under
the terms and conditions of the 10th Cir. R. 36.3.
(collectively, “Biocore”) against Hamid Khosrowshahi (“Khosrowshahi”) and by
Khosrowshahi against Biocore, Manoj Jain, Biocore’s founder, and Ritu Jain, Manoj
Jain’s wife. Biocore asserted claims for misappropriation of trade secrets against
Khosrowshani and sought damages and injunctive relief. Khosrowshani asserted his
claims against Biocore and the others for unpaid but promised compensation.
The two cases were consolidated for all purposes and the few claims surviving
summary judgment were tried before a single jury. The jury awarded Biocore $155,236.00
in damages on its misappropriation of trade secrets claim against Khosrowshahi. The
district court, on the basis that this amount was “either too high or too low” and thus
unsupported by the evidence, granted Khosrowshahi’s motion for a new trial on the issues
of liability and damages. The second trial, by agreement of the parties, was to the court.
In that trial, the court found no trade secrets had been misappropriated and awarded no
damages.
Biocore now takes an appeal from the judgment of the second trial. Khosrowshahi
appeals the court’s denial of his motions for judgment as a matter of law on Biocore’s
misappropriation of trade secret claims. He also appeals the denial of his motion for a new
trial on his claims against Biocore.
II
Biocore Medical Technologies, Inc. (“BMT”), a wholly-owned subsidiary of
Biocore, Inc., is a Kansas-based producer of medical products, including collagen-based
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products that assist in the healing of wounds.1 Biocore, Inc., founded by Manoj Jain,
employed Hamid Khosrowshahi as an executive beginning in 1993. In 1996,
Khosrowshahi was promoted to the office of president of BMT. The two men were
congenial until June of 1997. Khosrowshahi last visited the offices of Biocore and BMT
in approximately May of 1997 and resigned the following month.
Khosrowshahi claims Jain promised him a 10% stock ownership in Biocore in
1993, a 10% stock ownership in BMT in 1995, a salary of $120,000 to start, and a salary
increase to $150,000 after 1995. He says he left his previous job with Medical Actions,
Inc., which paid $108,000 annually, in order to take the Biocore job. Opening Brief of
Appellee Khosrowshahi in Case No. 3170 and Appellant in Case No. 3180.
Khosrowshahi had access to information regarding all stages of Biocore’s
manufacturing process and he kept thousands of pages of Biocore’s documents when he
resigned. Prior to his resignation, Khosrowshahi began talking to Integra LifeSciences,
Inc. (“Integra”), based in New Jersey, about a job. On July 3, 1997, he signed a
confidentiality agreement with Integra. On July 9, he provided Integra samples of
Biocore’s products. On July 10, he entered into a consulting agreement with Integra under
which he was to receive $10,000 monthly and have as his primary responsibility to, “set
forth and begin execution of an operating plan for a collagen-based wound care business.”
1
These and other facts recited below are taken from Biocore et al. v.
Khosrowshahi, 96 F. Supp. 2d 1221 (D. Kan. 2000), the reported Memorandum and
Order by the District Court in this litigation.
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Biocore, 96 F. Supp. 2d at 1225. In October of 1997 Integra asked Khosrowshahi to enter
into a new consulting agreement that, in part, would require him to provide a list of
Biocore’s customers. Khosrowshahi declined and instead signed another agreement
renewing the relationship with Integra and providing that he would receive an 8%
commission for sales to prior distributors of collagen wound care products and a 3%
commission for sales to new distributors.
In the course of Khosrowshahi’s employment with Integra, he created a business
plan, dated July 23, 1997, to introduce Integra to the process of manufacturing collagen
wound care products. Integra was trying to create a wound care product that would
compete with Biocore’s. In order to help Integra develop its collagen products,
Khosrowshahi arranged to purchase Biocore’s products from Biocore distributors. By
January of 1998, however, the plan had come to an end and Integra never brought any
collagen wound care product to market.
Biocore’s collagen wound care product manufacturing process had been kept
partially secret. Specifically, the formula for a key element in the process, “Chemical Z,”
had been kept secret and only a few Biocore employees knew it. The district court
concluded that the entire process was a trade secret under Kansas law, K.S.A. § 60-
3320(2). Biocore, 96 F. Supp. 2d at 1226.
III
The parties present the following issues:
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1. Whether this court has jurisdiction to hear Khosrowshahi’s appeal (No. 00-3180),
where the plaintiff filed his notice of appeal more than one year after an entry of
judgment that did not dispose of all claims;
2. Whether the district court erred when it granted Khosrowshahi a new trial on both
liability and damages, rather than either order remittitur on the ground that the jury’s
award of $155,236 to Biocore was unsupported by the evidence, or when it denied
judgment as a matter of law in favor of Khosrowshahi;
3. Whether the district court’s finding at the second trial that Khosrowshahi had not
misappropriated any trade secrets was clearly erroneous;
4. Whether the district court erred when it denied Biocore’s application for post trial
injunctive relief;
5. Whether the district court’s admission of evidence regarding sales to a third entity and
a conspiracy between Khosrowshahi and TAFA and its denial of a limiting instruction as
to the evidence regarding sales to a third entity were reversible error; and
6. Whether the trial court erred in denying Khosrowshahi a new trial on his claims
against Biocore for deferred compensation and stock ownership.2
We address each of these issues in turn.
A
Our appellate jurisdiction
We must first determine whether we have jurisdiction to hear this appeal. Steel
Co. v. Citizens for a Better Env’t, 523 U.S. 83, 94-95 (1998).
Biocore argues that this court lacks jurisdiction to hear Khosrowshahi’s appeal
because he failed to give timely notice as required by Fed. R. App. P. 4(a)(1). That rule
Khosrowshahi concedes that he did not move for directed verdicts on his claims
2
and does not now appeal denial of judgment as a matter of law in his favor. Reply Brief
of Khosrowshahi at 2.
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provides, in order to appeal in a civil case, a party must file a notice of appeal within 30
days after the date of entry of the judgment or order appealed from. This time
requirement is both “mandatory and jurisdictional.” Browder v. Director, Dep’t of
Corrections, 434 U.S. 257, 264 (1978).
Biocore argues that the relevant date of entry of judgment is the date judgment on
both parties’ claims was first entered, February 12, 1999. After this entry, however, the
district court granted Khosrowshahi’s motion for a new trial on the issues of his liability
and the damage award of $155,236 to Biocore. The court reentered judgment following
the second trial on May 5, 2000. Biocore argues that, as regards Khosrowshahi’s original
claims against Biocore, which were not retried, the date of original entry of
judgment—February 12, 1999—is the relevant date, not May 5, 2000. In so arguing,
Biocore relies on Farkas v. Rumore, 101 F.3d 20 (2d Cir. 1996). If this reasoning were
correct, Khosrowshahi’s notice of appeal, filed May 5, 2000, would have been untimely
and, therefore, barred by Fed. R. App. P. 4(a).
Because the court ordered the two cases “consolidated for all purposes,” we apply
the rule announced in Trinity Broadcasting Corp. v. Eller, 827 F.2d 673 (10th Cir. 1987).
There, we observed that the circuits were split regarding the finality of judgments in
consolidated cases and we adopted the rule of the Ninth Circuit:
The Ninth Circuit has adopted an absolute rule that a judgment in a
consolidated action that does not dispose of all claims is not final without a
Rule 54(b) certification. . . . We agree with the Ninth Circuit’s approach,
and adopt the rule that a judgment in a consolidated action that does not
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dispose of all claims shall not operate as a final, appealable judgment under
28 U.S.C. § 1291. . . . Our adoption of any other rule would lead to the
same piecemeal review Rule 54(b) seeks to prevent. We reject the flexible
approach in considering the nature of the consolidation in each individual
case because “it is essential that the point at which a judgment is final be
crystal clear because appellate rights depend upon it.”
Trinity Broadcasting, 827 F.2d at 675 (citations omitted).
This rule, contrary to Biocore’s assertion, is consistent with Farkas because there a
court clerk rather than the court itself vacated and reentered judgment–without making
any changes of substance. Farkas makes plain that it applies “[w]here a judgment is
reentered, and the subsequent judgment does not alter the substantive rights affected by
the first judgment . . . .” 101 F.3d at 22 (citing FTC v. Minneapolis-Honeywell Regulator,
344 U.S. 206 (1952)). In cases where the trial court changes matters of substance, or
resolves an ambiguity, the period during which a notice of appeal begins to run is from
the later date. Id. at 23.
We therefore conclude that under Trinity Broadcasting, Fed. R. App. P. 4(a)(1)
does not render Khosrowshahi’s appeal (No. 00-3180) untimely. Consequently, we have
jurisdiction to hear the appeals from the district court’s final judgment pursuant to 28
U.S.C. § 1291.
B
Whether the district court erred when it granted Khosrowshahi
a new trial on both liability and damages
Biocore asks us to reverse the district court’s grant of a new trial on the
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misappropriation issue and to reinstate the jury’s award of $155,236. Specifically,
Biocore alleges that, in granting Khosrowshahi a new trial on its misappropriation claim,
the district court (1) improperly relied upon juror statements and (2) set aside a verdict
that was supported by the evidence. If we should hold that the new trial was properly
granted, Biocore argues in the alternative either the district court erred by not granting
remittitur, or the district court should have held a new trial on the issue of damages only,
rather than on both damages and liability. Khosrowshahi asks us to affirm the grant or, in
the alternative, to hold that he was entitled to judgment as a matter of law on the
misappropriation issue.
1
The district court’s alleged reliance on juror statements
The record documents some contact with several jurors that Biocore suggests
improperly influenced the court. After the delivery of the verdict, a judicial clerk, in his
role as bailiff for the court, discussed the basis for the jury’s award with some of the
jurors and this information was passed on to the judge. The judge was, apparently, also
aware of some juror statements made to reporters from the Kansas City Star. What the
court learned was that some jurors indicated that they had based their damage award on
two factors: the salary paid to Khosrowshahi by his new employer Integra during the six
month period when Integra was attempting to duplicate Biocore’s product, and a
percentage of the profit Khosrowshahi received from sales of Biocore’s product to TAFA,
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another distributor of medical products. The jury had heard testimony regarding sales to
TAFA of products Khosrowshahi had received as free samples from Biocore. II Aple.
Supp. App. 359 (testimony of Khosrowshahi). This was offered to show that
Khosrowshahi had a motive to misappropriate trade secrets. Biocore, 96 F. Supp. 2d at
1236. The court ruled, however, the TAFA sales could form no basis for an award to
Biocore since this claim was deliberately not asserted, Biocore, 96 F. Supp. 2d at
1236,–Biocore dropped its claims that Khosrowshahi disclosed trade secrets to TAFA to
avoid sanctions for destroying financial records. I Aple. Supp. App. 110-11.
Biocore correctly points out that Fed. R. Evid. 606(b) prohibits the court from
considering jurors’ later comments in determining whether the verdict was supported by
the evidence. The court, aware of this rule, explained that it was “[b]y serendipity” that it
came into possession of this information, and that it made its decision on other grounds.
II Aple. App. 518. Specifically, the record does show that the court was aware of the
impropriety of relying on these kinds of statements by jurors, and gives the court’s
reasoning, independent of juror comments, in granting a new trial:
THE COURT: Well, that is not it. Maybe I need to clarify that, because I
agree with you that [the jurors’ comments are] not information we can take
into account. But if you—even if you put that to one side—well, I guess
especially if you put that to one side, it becomes all the more mystifying
how they came up with the figure that they did. And given—plaintiffs’
proof on the issue of damages was basically an all or nothing thing. It was
either all of the costs of research and development since the beginning of
BioCore or nothing. And I don’t see any way that the jury could have
rationally sifted through all the research and development costs and come
up with that particular figure based on any scenario that was plausibly
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submitted . . . .
II Aple. App. 399-400.
Whether or not explicitly relied upon, the district court did accept the jurors’
statements at face value, believing that “[b]y serendipity, the Court understands how the
jury reached its decision . . . .” II Aple. App. 518. This, however, may not have been
accurate. Among the numerous evils Rule 606 attempts to avoid, the Advisory Notes to
the 1974 Enactment mentions “the possible exploitation of disgruntled or otherwise
badly-motivated ex-jurors.” Even assuming that jurors can accurately remember and state
the basis for their verdict, there is no reason to suppose that every juror’s casual after-the-
fact explanation will be fully reliable. See United States v. Gonzalez, 227 F.3d 520, 525-
27 (6th Cir. 2000) (discussing with evident skepticism a juror’s statements to a trial court
regarding jury deliberations).
“It is settled law that juror testimony is inadmissible to impeach a verdict, except
where the proffered testimony relates to whether extraneous prejudicial information or
any outside influence was improperly brought to bear upon any juror.” United States v.
Miller, 806 F.2d 223, 225 n.2 (10th Cir. 1986) (citations and quotations omitted). The
Advisory Committee Notes to the 1972 Proposed Rules cite authority for the proposition
that federal courts generally cannot consider jurors’ statements regarding how they
reached the verdict:
Under the federal decisions the central focus has been upon insulation of
the manner in which the jury reached its verdict, and this protection extends
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to each of the components of deliberation, including arguments, statements,
discussions, mental and emotional reactions, votes, and any other feature of
the process. Thus testimony or affidavits of jurors have been held
incompetent to show a compromise verdict, Hyde v. United States, 225 U.S.
347, 382 (1912); a quotient verdict, McDonald v. Pless, 238 U.S. 264(1915); speculation as to insurance coverage. Holden v. Porter, 405 F.2d
878 (10th Cir. 1969); Farmers Coop. Elev. Ass’n v. Strand, 382 F.2d 224,
230 (8th Cir. 1967), cert. denied 389 U.S. 1014; misinterpretation of
instructions, Farmers Coop. Elev. Ass’n v. Strand, supra; mistake in
returning verdict, United States v. Chereton, 309 F.2d 197 (6th Cir.1 962);
interpretation of guilty plea by one defendant as implicating others, United
States v. Crosby, 294 F.2d 928, 949 (2d Cir. 1961).
The notes add that “[t]he values sought to be promoted by excluding the evidence include
freedom of deliberation, stability and finality of verdicts, and protection of jurors against
annoyance and embarrassment.” (citing McDonald v. Pless, 238 U.S. 264 (1915)).
We are troubled by the circumstances revealed by this record, and noted above,
concerning the information related to the judge by the judicial clerk.3 Nevertheless,
considering all the surrounding circumstances here, we accept the district court’s
3
See the Advisory Committee Notes:
Jurors will not be able to function effectively if their
deliberations are to be scrutinized in post-trial litigation. In
the interest of protecting the jury system and the citizens who
make it work, rule 606 should not permit any inquiry into the
internal deliberations of the jurors.
Advisory Notes to the 1974 Enactment (citation omitted). See, e.g., Tanner v. United
States, 483 U.S. 107, 127 (1987) (“[L]ong recognized and very substantial concerns
support the protection of jury deliberation from intrusive inquiry.”); United States v.
Bagnariol, 665 F.2d 877, 884 (9th Cir. 1981) (jurors “may not be questioned about the
deliberative process. . . ”).
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explanation that it did not rely on the jurors’ comments in reaching its decision.
2
Whether the verdict for Biocore was adequately supported by the evidence
The district court granted a new trial on the grounds that the jury’s damage award
of $155,236 to Biocore “could be viewed as either too high or too low,” and that
“[n]othing in the evidence . . . supported a verdict in the amount awarded here.” II Aple.
App. 518 (Order of July 7, 1999). Central to this ruling was the court characterization of
Biocore’s claim as “all or nothing.” Id. at 399-400. This ruling by this district court will
be reviewed for an abuse of discretion–“[w]here a new trial motion asserts that the jury
award is not supported by the evidence, the verdict must stand unless it is clearly,
decidedly, or overwhelmingly against the weight of evidence.” Anaeme v. Diagnostek,
Inc., 164 F.3d 1275, 1284 (10th Cir. 1999) (citations omitted).
The question of whether the jury award in this case was clearly against the weight
of the evidence must be considered under Kansas law. As the Supreme Court has
explained, the law applied in evaluating the legality of the amount of a jury verdict is
substantive rather than procedural. Gasperini v. Center for the Humanities, 518 U.S. 415,
425, 428-31 (1996) (holding that the standard for granting a new trial on the basis that a
jury’s award of damages is improper “influences outcomes by tightening the range of
tolerable awards”). Therefore, under the principles laid out in Erie R. Co. v. Tompkins,
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304 U.S. 64 (1938), a federal trial court sitting in diversity is required to apply state law
in determining whether a jury’s award of damages is proper.4 Smith v. Ingersoll-Rand
Co., 214 F.3d 1235, 1251 (10th Cir. 2000) (“In a diversity action state law governs the
propriety of an award of damages.”). Where state law governs the propriety of an award
of damages, the trial court should determine whether the jury’s verdict is within the
confines set by state law. Gasperini, 518 U.S. at 437 (citing Browning-Ferris Indus. of
Vt., Inc. v. Kelco Disposal, Inc., 492 U.S. 257, 279 (1989)). The court of appeals “should
then review the district court’s determination under an abuse-of-discretion standard.” Id.(footnote omitted).
Kansas law governing the propriety of a jury award is described in Mettee v.
Urban Renewal Agency, 547 P.2d 356 (Kan. 1976). There, the trial court rejected the
award as based on witnesses’ valuations that it found were “either unreasonably high or
unreasonably low” and granted a new trial on the basis that the award was “grossly
excessive under the credible evidence” and “contrary to the evidence.” Id. at 359. In
reversing the trial court, the Kansas Supreme Court explained that a new trial can be
4
Both parties urge us, as they urged the district court below, to apply a purely
federal standard. See I Aple. App. 283-84 (Khosrowshahi’s memorandum to the district
court in support of a motion for a new trial); 308-09 (Biocore’s memorandum). We,
however, are not bound by the parties’ agreement regarding the standard of review. Koch
v. United States, 47 F.3d 1015, 1018 (10th Cir. 1995). Neither party cites Gasperini or
any similar case that would provide the correct standard of review. In any case, as noted
below, the incorrect application of a purely federal standard would not change the
outcome of the case at bar.
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granted by the trial court on grounds that a jury verdict is not supported by the evidence
only if the trial court sets forth “specific reasons for its order.” Id. These reasons cannot
be merely “a substitution of the court's judgment for that of the jury.” Id. at 360. As the
Mettee court cautioned: “A trial court cannot weigh the evidence, make its own
determination, and substitute its judgment for that of a jury . . . . A verdict within the
evidence cannot be disturbed by the trial court even though the court would have arrived
at a different conclusion.” Id. In Sanjuan v. IBP, Inc., 160 F.3d 1291 (10th Cir. 1998),
decided after Gasperini, we applied Kansas law regarding the grant of a new trial. There,
we reviewed a jury’s award of damages, explaining that “[i]n reviewing a jury’s award of
damages, this Court should sustain the award unless it is clearly erroneous or there is no
evidence to support the award.” Id. at 1299 (citations and quotations omitted).
Applying a federal standard, we noted in Midwest Underground Storage, Inc. v.
Porter, 717 F.2d 493, 501 (10th Cir. 1983), “[i]t is well settled that a verdict will not be
upset on the basis of speculation as to the manner in which the jurors arrived at it.”
There, we also warned that “a trial judge may not have the same jury reconsider what
appears to him (or what he might determine upon general inquiry) to be a miscalculation
of general damages. Appearances do not always ring true . . . .” Id. (quoting Chicago,
Rock Island & Pacific R.R. v. Speth, 404 F.2d 291, 295 (8th Cir. 1968)) (quotations and
alteration omitted). Therefore, although we apply the state standard to this case, we feel
that application of the federal standard would not yield a different result.
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Here, the trial court justified its granting of a new trial with only brief reasoning
echoing its “all or nothing” view of the case: “The jury verdict in this case could be
viewed as either too high or too low; the Court expresses no opinion on that question.
Nothing in the evidence, however, supported a verdict in the amount awarded here.” II
Aple. App. 519 (Order of July 7, 1999). At a hearing, the trial judge simply said: “I have
told [the parties] since the beginning how I see this issue . . . . [W]hat we have is a
situation where this is no cogent way of looking at the evidence with respect to the
measure of damages that supports any award for $155,235.” II Aple. App. 392. This
reasoning is strikingly similar to the prohibited reasoning of the Kansas state court in
Mettee. In both cases, an emphasis was placed on the trial judge’s own view of what the
evidence could credibly show, without explaining why no reasonable jury could hold a
different view. This emphasis is misplaced because in evaluating whether a jury’s award
of damages is proper, under either Kansas or federal law, the focus is not on the trial
judge, nor on whether the judge could see any “cogent way of looking at the evidence”
that would support the jury’s award. Rather, the question is whether the jury could do so.
For the reasons detailed below, we believe it could.
Khosrowshahi strongly argues that there was no evidence on the basis of which the
jury could have separated out portions of the $5 million claim. Brief of Appellee
Khosrowshahi in No. 3170 at 7-8, 19-23. Though the district court characterized
Biocore’s $5 million claim as “all or nothing,” sections of the district court’s order and
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relevant portions of the record could lead a rational fact finder to a different conclusion.
While we agree that Biocore argued that it was entitled to the entire $5 million, we do not
find in the record an adequate basis for concluding that this was a unitary sum and that
the evidence could not support a lesser award.
The record contains evidence that the jury could have relied upon in granting an
award of a lesser amount. Many of the expenditures underlying the $5 million figure
were open to serious question. Manoj Jain said that he spent his own and his family’s
money on research and development in India from 1988 through 1996, but was unable to
provide good records. I Aple. App. 92-94, 113-114; II Aple. Supp. App. 378, 413-15,
440. Khosrowshahi asserts that research and development costs were either poorly
documented or not documented at all: “R&D costs, in India, or elsewhere, were paid in
cash or otherwise, with no record, nothing, to establish they happened.” Brief of
Appellee Khosrowshahi in No. 3170 at 8. He cites extensive evidence which he argues
calls into doubt most or all of Biocore’s asserted $5 million expenditure on research and
development. Id. at 7-8. We therefore conclude that the jury could have reasonably
rejected Biocore’s argument that it was damaged in the amount of $5 million.
The jury’s rejection of the $5 million figure would not necessarily have led it to the
conclusion that Biocore spent no money at all on the research and development of either
trade secrets or proprietary information. See II Aple. Supp. App. 594-95 (testimony of
Biocore’s former controller Timothy Johnson regarding the unavoidable costs of research
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and development). Rather, the jury could have come to the more logical conclusion that
Biocore possessed some confidential information that was worth a substantial amount of
money, but less than $5 million. A good deal of evidence regarding specific expenses,
which the jury had the discretion to accept or reject, was presented. See, e.g., I Aple.
App. 143-48 (testimony concerning research and development costs); II Aple. App. 522-
37 (Biocore’s financial statements for 1995-96 showing research and development as well
as more specific expenses). Therefore, though Biocore claimed the $5 million as a lump
sum, there is no reason the jury would have been compelled to accept or reject this claim
as a whole, rather than evaluating each piece of evidence or expense individually.
The jury also could have valued Biocore’s trade secrets by taking note of the
amount by which Khosrowshahi’s salary increased when he went to Integra. It was
argued at trial that Khosrowshahi misappropriated Biocore’s trade secrets and gave them
to Integra, Biocore’s competitor. Biocore, 96 F. Supp. 2d at 1224. If the jury believed
that some portion of Khosrowshahi’s salary increase represented the value Integra placed
on acquiring Biocore’s trade secrets, they could reasonably have used such a figure in
fixing damages.
Further, we need not investigate every possible method the jury might conceivably
have used to calculate the exact sum it awarded. “[T]he amount of damages awarded by a
jury can be supported by any competent evidence tending to sustain it.” Bennett v.
Longacre, 774 F.2d 1024, 1028 (10th Cir. 1985) (citing Hitchcock v. Weddle, 304 F.2d
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735, 737 (10th Cir. 1962)). It is sufficient that the jury’s award was within the range of
possible awards.
Finally, we note that the district court’s order granting a new trial is inconsistent
with an “all or nothing” view of damages. In concluding that both damages and liability
issues would have to be retried, the district court reasoned that:
[t]he extent to which defendant [Khosrowshahi] misappropriated plaintiffs’
trade secrets—if he did so at all—was hotly disputed at trial. The Court
cannot determine the extent to which the jury found that misappropriation
had occurred. Without this information, a new jury could not render an
informed verdict on the issue of damages. For a new jury to consider only
damages would therefore present a practical impossibility.
II Aple. App. 519-20 (order of July 7, 1999). This holding demonstrates that the district
court viewed the amount of damages as dependent on the extent of misappropriation
rather than as an “all or nothing” proposition.
We agree with the district court’s assessment that the issue of whether, and to what
extent, Khosrowshahi misappropriated Biocore’s trade secrets was “hotly disputed” at
trial. II Aple. App. 519. We conclude that the jury’s verdict was one to which a jury
“acting fairly and intelligently, might (have) come.” Mettee, 547 P.2d at 360. We
therefore hold that the district court abused its discretion in setting aside the jury’s
$155,236.00 award of damages to Biocore and in granting a new trial and we reverse that
ruling. Biocore’s alternative arguments–that in the second trial it should have been
offered remittitur or that the second trial should have been on damages alone–are
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therefore moot.
3
Khosrowshahi’s motion for judgment as a matter of law on Biocore’s claims
In the alternative, Khosrowshahi contends that “[t]he only error by the trial court
was in not granting defendant’s motion for judgment as a matter of law.” “We review de
novo a district court’s disposition of a motion for judgment as a matter of law, applying
the same standard as the district court.” Baty v. Willamette Indus., Inc., 172 F.3d 1232,
1241 (10th Cir. 1999) (citation and quotations omitted). Judgment as a matter of law is
appropriate “only if the evidence points but one way and is susceptible to no reasonable
inferences supporting the party opposing the motion.” Id. (citation and quotations
omitted). We do not find this standard was met here.
The district court denied Khosrowshahi’s motion for judgment as a matter of law,
holding both that there was sufficient evidence from which the jury could infer that
Khosrowshahi misappropriated Biocore’s trade secret information, and that
Khosrowshahi was unjustly enriched by that misappropriation. II Aple. App. 390-92. In
so holding, the district court applied Kansas state law, the appropriateness of which was
acknowledged by Khosrowshahi, II Aple Ap. 266-68 (citing K.S.A. § 60-3322).
Biocore, 96 F. Supp. 2d at 1224 (applying the Kansas Uniform Trade Secrets Act). In
support of his argument to this court, however, Khosrowshahi neither argues for a
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different interpretation of Kansas trade secret law, nor does he show how the evidence
could not support recovery under Kansas law as applied by the district court. Opening
Brief of Appellant Khosrowshahi in No 3180 at 14-16 (citing Chromoglass Corp. v.
Ferm, 344 F. Supp. 924 (M.D. Pa. 1972); E. W. Bliss Co. v. Struthers-Dunn, Inc., 408
F.2d 1108 (8th Cir. 1969)).
Instead, Khosrowshahi attempts to adopt by reference arguments made in his
motion for judgment as a matter of law in the district court. Opening Brief of
Khosrowshahi in No 3180 at 15 (“The standards for appellate review . . . justify this
Court’s entry of judgment for the reasons originally stated by Khosrowshahi in his motion
and based on the analysis and authority set forth by Khosrowshahi in response to the new
trial issues, [i]nfra.”). We reject this proffer of arguments as improper.5
As an additional argument for judgment as a matter of law in his favor,
Khosrowshahi invites us to review the district court’s full Memorandum and Order where
the court found that Khosrowshahi had not misappropriated any trade secrets. Id. at 15
(citing Aple. App. 1154-85). This, however, is not persuasive, because the Memorandum
and Order merely spells out what the judge found and provides no indication that a
reasonable trier of fact could not find differently. See Lytle v. Household Mfg., Inc., 494
Adoption by reference of materials filed in the district court is impermissible
5
under Fed. R. App. P. 28(a)(6). One reason for this rule is to prevent parties from
circumventing page limits. Gaines-Tabb v. ICI Explosives, USA, Inc., 160 F.3d 613, 623-
24 (10th Cir. 1998).
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U.S. 545, 555 (1990) (“Nothing in the record indicates that the court reached the only
reasonable conclusions or that a jury could not have found the facts differently and
entered a different verdict. As we have long recognized, a jury and a judge can draw
different conclusions from the same evidence.”). Indeed, the district court recognized
that reasonable fact finders could reach different conclusions on the misappropriation
claim when it denied Khosrowshahi’s motion for judgment as a matter of law.
Khosrowshahi, therefore, does not show that the district court erred in denying his
motion for judgment as a matter of law on this issue.
C
Whether the district court’s finding of no misappropriation of trade secrets
in the second trial was clearly erroneous
Because we reverse the district court’s grant of a new trial, Biocore’s challenge to
the verdict at the second trial is moot.
D
Injunctive relief
Biocore applied for injunctive relief in the district court to restrain the use or
disclosure of Biocore’s trade secrets, inter alia. III Aple. App. 1099-1103. The district
court denied Biocore’s motion for injunctive relief at the close of the first trial because it
had granted a new trial on the question of whether Khosrowshahi had appropriated any of
Biocore’s trade secrets. II Aple. App. 411 (minute sheet denying injunctive relief as
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moot). Nor did the district court address the propriety of injunctive relief at the close of
the second trial because there it found that Khosrowshahi had not appropriated any of
Biocore’s trade secrets. For the reasons detailed above, we reverse the grant of a new
trial and direct that the district court reinstate the jury’s verdict in favor of Biocore for
$155,236.00. Consequently, the propriety of injunctive relief is no longer moot and
should be considered by the district court on remand.
E
Whether admission of conspiracy and TAFA sales evidence
was improper and warrants a new trial on Khosrowshahi’s claims
Khosrowshahi argues that the district court should have granted him a new trial
due to error in the admission of certain evidence regarding product sales to TAFA and an
alleged conspiracy between him and a competitor of Biocore, Richard Walsh (“Walsh”).
Opening Brief of Appellee Khosrowshahi in No 3170 at 12-13, 27-29. The evidentiary
rulings of a trial court are reviewed for an abuse of discretion. Faulkner v. Super Valu
Stores, Inc., 3 F.3d 1419, 1433 (10th Cir. 1993). We likewise review the district court’s
decision to deny a motion for a new trial for an abuse of discretion. Anaeme, 164 F.3d at
1284.
The conspiracy evidence, as Khosrowshahi characterizes it, consisted of testimony
regarding meetings between Khosrowshahi and Walsh where they allegedly made plans to
harm Biocore for their own financial advantage. I Aple. Supp. App. 226-28. The TAFA
sales evidence indicated that Khosrowshahi sold to TAFA, for a substantial price, some
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Biocore products that he received as free samples. According to Khosrowshahi, both the
TAFA sales and conspiracy evidence were offered to show that Khosrowshahi was
actively seeking to harm Biocore and that he had knowledge of how to produce Biocore’s
product. Opening Brief of Appellee Khosrowshahi in No 3170 at 27. Neither the
conspiracy nor the TAFA sales, however, constituted independent theories of liability. I
Aple. Supp. App. 110-11 (stipulating dismissal of conspiracy claims); Id. at 114 (TAFA
sales claims).
In support of his argument that the district court should have granted him a new
trial, Khosrowshahi cites over 100 pages of the record that purportedly show conspiracy
and sales evidence being admitted over his objections. Opening Brief of Appellee
Khosrowshahi in No 3170 at 13-14 and nn.5-6 (citing I Aple. Supp. App. 110-21, 223-47,
248-53, 274-76, 282-83; II Aple. Supp. App. 305, 335-36, 348-49, 354-59, 380, 427-32,
435; III Aplt. App. 824-884).6 Khosrowshahi does not identify any specific ruling of the
trial court that he is challenging nor does he articulate any specific grounds for reversal.
Instead, Khosrowshahi makes three general statements: 1) “The introduction of [the sales
evidence and the conspiracy evidence] with respect to Khosrowshahi’s claims can’t be
considered harmless;” 3) “Admission of hearsay testimony, such as repeatedly came in
[sic] on the conspiracy issue . . . constitutes reversible error;” and 3) “The refusal to give
6
Khosrowshahi also cites a number of pages of an unidentified “Walsh
Transcript” or “Walsh Trial Transcript” rather than the appendix. Id. at 13-14 and nn.5-6.
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a curative instruction was not harmless.” Opening Brief of Appellee Khosrowshahi in No
3170 at 27-28.
Fed. R. App. P. 28(a)(9)(A) provides that the argument section of an appellant’s
brief must contain “appellant’s contentions and the reasons for them, with citations to the
authorities and parts of the record on which the appellant relies.” Consequently, this
court will consider issues only to the extent that they are raised with adequate specificity
in Khosrowshahi’s brief. We will not sift through voluminous portions of transcript in
search of all evidentiary rulings made by the district court, nor will we construct
arguments regarding those rulings for Khosrowshahi. Thomas, 965 F.2d at 827. And, as
stated above, we will not allow Khosrowshahi to incorporate by reference all the
arguments he made to the district court on these issues. Gaines-Tabb, 160 F.3d at 623-
24.
We therefore construe this section of Khosrowshahi’s brief as adequately
appealing the district court’s denial of a new trial on the basis that the court admitted
irrelevant evidence in violation of Fed. R. Evid. 402, hearsay in violation of Fed. R. Evid.
802, and failed to give the limiting instruction required by Rule 105.
1
Relevance
Khosrowshahi asserts that, “evidence of Khosrowshahi’s sales to TAFA of
Biocore product provided by Richard Walsh and testimony and suggestions in the record
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by Ramon Carter, that Khosrowshahi was supposedly out to get Biocore and could
produce the product, etc. were erroneously allowed into evidence.” Brief of Appellee
Khosrowshahi in No. 3170 at 27. In support, Khosrowshahi refers to an earlier footnote
in his brief that contained citations to over 100 pages of the record. Id. One of the
portions of the record cited by this footnote was a transcript of an argument before the
district court regarding the admissibility of Carter’s testimony specifically and the
conspiracy evidence and sales evidence generally. I Aple Supp. App. 224-246. As such,
this appears to be another attempt to adopt by reference arguments made in district court.
For the reasons noted above, we reject this proffer of arguments as improper. See supra
text accompanying note 5.
2
Hearsay
Khosrowshahi cites portions of the trial transcripts and asserts: “Admission of
hearsay testimony, such as repeatedly came in [sic] on the conspiracy issue with the
testimony of Ramon Carter ... constitutes reversible error.” Brief of Appellee
Khosrowshahi in No. 3170 at 12-13, 27-29. The cited portions of the trial transcript,
however, contain neither hearsay objections nor rulings on hearsay objections–the
portions of the record cited by Khosrowshahi show the district court expressly declined to
make a hearsay ruling. I Aple. Supp. App. 245 (In response to hearsay objections
regarding the conspiracy evidence, the district court responded, “He [Carter] may not be
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there [on the stand] very long, but we’ll just see what he has to say.”). Khosrowshahi also
cites his various objections to many of Biocore’s proposed trial exhibits, some of which
were hearsay based. I Aple. Supp. App. 112-13, 115-17, 120.
A purported erroneous admission of evidence by the district court will not be reviewed
on appeal unless the party alleging error cites the portion of the record containing that party’s
objection to the evidence and the district court’s ruling on that objection. Jetcraft Corp. v.
Flight Safety Int’l, 16 F.3d 362, 366 (10th Cir. 1993). See 10th Cir. R. 28.2(b) & (c). Here,
Khosrowshahi does not show where the court ruled on his hearsay objections, nor does he
indicate exactly what testimony was admitted into evidence. Khosrowshahi also does not
show where the court ruled on his objections to the exhibits, or which of the challenged
exhibits were admitted into evidence. We therefore decline to review these alleged errors.7
3
Limiting Instruction
Khosrowshahi asserts that the court refused to give a “curative instruction” or
7
As a side note, even though we decline to review these alleged errors, we believe
it unlikely that the district court committed reversible error in respect to the admission of
potential hearsay evidence. As the portions of the record cited by Khosrowshahi indicate,
the district court was keenly aware of the danger of inadmissible hearsay and was ready to
step in to prevent its introduction. I Aple. Supp. App. 252-53 (The district court told
Biocore’s counsel before the testimony of Carter that, “You can either tell him [Carter]
before you put [him] up on the stand that he can’t talk about hearsay, or Ill tell him.”); id.
at 337 (The district court told Biocore’s counsel when discussing the conspiracy evidence
that, “I don’t think you can just paint a really broad brush here and say that all of Walsh’s
statements are statements against penal interest.”).
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“cautionary instruction”:8 “[T]he court allowed in [the alleged conspiracy] evidence and
then refused to give a cautionary instruction to the jury with respect to the claimed
‘conspiracy.’” Brief of Appellee Khosrowshahi in No. 3170 at 13. Khosrowshahi goes
on to say that:
[a] later request for a curative instruction explaining the role of the
[conspiracy] evidence was denied.
...
The refusal to give a curative instruction was not harmless error under the
circumstances; had the court given a proper instruction on the role of the
TAFA sales and conspiracy evidence, the jury might have returned a
different verdict.
Id. at 28 (citing I Aple. Supp. App. 282-83). In challenging the district court’s limiting
instruction, however, Khosrowshahi seems to be complaining about rulings that were
favorable to him, but apparently not as favorable as he hoped. Khosrowshahi’s own
citations to the record demonstrate that, contrary to his assertions, the court did respond to
Khosrowshahi’s counsel’s only objections as to the conspiracy evidence’s limited
relevance by giving a limiting instruction.
As was explained above, the district court admitted the conspiracy evidence not as a
separate theory of liability but instead to show that Khosrowshahi was actively seeking to
harm Biocore and that he had knowledge of how to produce Biocore’s product. Brief of
Appellee Khosrowshahi in No. 3170 at 27. The record discloses that the district court made
He is apparently referring to the limiting instruction provided for under Fed. R.
8
Evid. 105.
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this distinction clear to the jury. Responding to the objection of Khosrowshahi’s counsel, the
court said:
Members of the jury, nobody here is claiming that they are entitled to
recover damages because of a conspiracy. . . .
...
You [the jury] wont be asked to render any verdict on any specific conspiracy
theory that involves damages.
I Aple. Supp. App. 430. This distinction was also reflected in the jury instructions
regarding Biocore’s claims against Khosrowshahi which did not contain any reference to
a conspiracy. I Aple. App. 167. We, therefore, conclude that the district court did not
abuse its discretion in failing to instruct the jury as Khosrowshahi requested.
In addition, “[n]o party may assign as error the giving or the failing to give an
instruction unless the party objects thereto before the jury retires to consider its verdict,
stating distinctly the matter objected to and the grounds of the objection.” Fed. R. Civ. P.
51 (emphasis added). Further, 10th Cir. R. 28.2(c) requires a party to include in their
initial briefs “a statement as to where a proper objection and the court's ruling thereon
may be found in the record” where that party is appealing based upon “the giving or
refusal to give a particular jury instruction.” “Because the purpose of the objection is to
give the [district] court an opportunity to correct any mistake before the jury enters
deliberations, an excessively vague or general objection to the propriety of a given
instruction is insufficient to preserve the issue for appeal.” Medlock v. Ortho Biotech,
Inc., 164 F.3d 545, 553 (10th Cir. 1999) (quotations and citation omitted).
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Here, Khosrowshahi only proffered his own instruction. This does not constitute
an implied objection to the instruction given by the district court. United States v. Voss,
82 F.3d 1521, 1530 (10th Cir. 1996). Indeed, Khosrowshahi’s own citation to the record
demonstrates that he did not object distinctly, neither explaining why the district court’s
instruction was insufficient nor stating grounds for his proposed instruction. Therefore,
even if we considered the district court’s jury instruction as insufficient, and we do not,
Khosrowshahi has presented no grounds for reversal on this issue.
F
Whether the verdict denying Khosrowshahi’s stock and
deferred compensation claims was supported by the evidence
Khosrowshahi asks that we reverse the district court’s denial of his motion for a
new trial on his stock and deferred compensation claims. Brief of Appellee
Khosrowshahi in No. 3170 at 12. He argues that he was entitled to a new trial because
the jury’s verdict was “against the weight of the evidence and insufficient as a matter of
law,” because his claims were closely intertwined with Biocore’s misappropriation claims
on which a new trial was granted, and because he was unfairly prejudiced by the improper
admission of the conspiracy and TAFA sales evidence. Id.As noted above, we have found no error in connection with the admission of the
conspiracy and TAFA sales evidence. We also reversed the district court’s grant of a new
trial on the misappropriation claim. Therefore, the sole remaining question is whether the
jury’s verdict for Biocore on the issue of Khosrowshahi’s stock and deferred
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compensation claims was supported by the evidence. The appropriate standard of review
is detailed in Anaeme:
We review the district court’s decision to deny a motion for a new trial only
for an abuse of discretion. Where a new trial motion asserts that the jury
verdict is not supported by the evidence, the verdict must stand unless it is
clearly, decidedly, or overwhelmingly against the weight of the evidence.
With respect to our review of the jury’s verdict, we consider the record
evidence in the light most favorable to the prevailing party.
164 F.3d at 1284 (citations and quotations omitted).
As an initial matter, Biocore argues that “this court lacks jurisdiction to entertain
Khosrowshahi’s belated attempt to appeal the verdict against him . . . .” Reply Brief of
Appellants Biocore and Biocore Medical in No. 00-3170 at 8. Biocore’s position is that
Khosrowshahi failed to preserve this matter for review because he did not make this
argument to the district court: “Khosrowshahi certainly never argued to the district court
that the jury’s verdict against him on his claims ‘was against the weight of the evidence
and insufficient as a matter of law’ . . . .” Id. Khosrowshahi, by contrast, contends that
he “moved for [a] new trial on all [his] claims . . . .” Brief of Appellee Khosrowshahi in
No. 3170 at 26. In support, Khosrowshahi cites only a portion of the record where the
district court said there was no reason to order a new trial on Khosrowshahi’s claims. Id.
(citing II Aple. App. 392-93). This, however, shows only that Khosrowshahi moved for a
new trial on his claims, and not that he moved for a judgment as a matter of law.
An analysis of the record does not provide a ready answer to the question of
whether Khosrowshahi made an argument for a new trial on his claims to the district
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court that he now makes to this court. The appendix includes Khosrowshahi’s
Memorandum in Support of Alternative Motion for New Trial. I Aple. App. 283-94.
Although the caption includes the case number representing Khosrowshahi’s claims, it is
not clear in the body of the memorandum that Khosrowshahi presented arguments for a
new trial on his claims as well as Biocore’s, rather than on Biocore’s claims alone.
Khosrowshahi makes only general arguments that improper admission of the conspiracy
and TAFA sales evidence was “highly prejudicial,” id. at 286, and as a result, “the jury
surely was confused and/or believed that they could consider such evidence for any
relevant determinations . . . . ,” id. at 292. We need not decide, however, whether
Khosrowshahi made these arguments to the district court since we find them
unpersuasive.
Even though we decline to decide whether Khosrowshahi’s argument was made to
the district court, we still have jurisdiction to consider the merits of this argument. “As a
general rule we refuse to consider arguments raised for the first time on appeal . . . .” Sac
& Fox Nation v. Hanson, 47 F.3d 1061, 1063 (10th Cir. 1995) (emphasis added and
quotations omitted). The “general waiver rule is not absolute . . . and we may depart from
it in our discretion.” Sussman v. Patterson, 108 F.3d 1206, 1210 (10th Cir. 1997)
(quotations omitted). Likewise in Valley Improvement Ass’n v. U.S. Fidelity & Guar.
Corp., 129 F.3d 1108, 1119 (10th Cir. 1997), we observed that, where the appellant
“failed to show that this issue was raised below, . . . we need not consider it.” We
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nevertheless went on to state there that “we are not persuaded that the judgment below
should be reversed” on the basis of the appellant’s arguments.” Id. We do the same here.
In this case, Khosrowshahi claimed that Manoj Jain had promised him 10% stock
ownership in both Biocore, Inc. and Biocore Medical Technologies, Inc.; a starting salary
of $120,000; and an increased salary of $150,000 beginning in 1995. Brief of Appellee
Khosrowshahi in No. 3170 at 9-10 (citing the record). At trial, Manoj Jain denied that he
had made any such agreements or that he owed Khosrowshahi any money. II Aple. Supp.
App. 421-22, 424-26, 467-68. This testimony was contradicted by several witnesses who
testified that Jain had admitted that Khosrowshahi owned an interest in Biocore and was
entitled to some additional money. III Aple. Supp. App. 582-83, 659-62, 665-66, 706,
710, 715-16. The jury returned a verdict for Biocore on this issue.
As plaintiff, Khosrowshahi bore the burden of persuasion on his claims. I Aple.
Supp. App. 165-66, 176-78 (jury instructions). First, we note that the jury was not
required to believe any of Khosrowshahi’s evidence and could, at its discretion, reject any
claim it found had not been proven by a preponderance of the evidence. Id. at 153, 158,
164 (jury instructions). In addition, the record shows that the only evidence presented of
the alleged stock and deferred compensation obligations was oral. See II Aple. Supp.
App. 320 (Khosrowshahi’s testimony that there was no written documentation that his
salary was to exceed $50,000); Id. at 323 (Khosrowshahi’s testimony that all promises of
stock were oral); Id. at 469.(Jain’s testimony that the market value of this amount of stock
- 32 -
in 1996 was $23 million). The lack of a written record could have formed a basis from
which reasonable jurors might have concluded that no stock or deferred compensation
agreement existed.
We therefore hold that the verdict was not “clearly, decidedly, or overwhelmingly
against the weight of the evidence,” and, accordingly, that the district court did not abuse
its discretion in denying Khosrowshahi’s motion for a new trial on the issue of his stock
and deferred compensation claims. Anaeme, 164 F.3d at 1284.
IV
For the reasons stated above, we REVERSE the district court’s grant of a new trial
and REMAND to the district court with instructions to enter judgment for Biocore in the
amount originally awarded by the jury, $155,236.00. We also REMAND the issue of
injunctive relief so that the district court can consider the propriety of this request. In all
other respects the judgment of the district court is AFFIRMED.
Entered for the Court
William J. Holloway, Jr.
Circuit Judge
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